Attorneys File Similar ERISA Lawsuit Against Freight Transporter

A group of attorneys representing retirement plan participants have sued at least two nationwide freight transporters in the last month for alleged fiduciary breaches.  

A new complaint against Old Dominion Freight Line, brought under the Employee Retirement Income Security Act, followed a lawsuit earlier this month against Knight-Swift Transportation that made substantially similar allegations.

The new complaint, Harvey L. Davis vs. Old Dominion Freight Line, Inc., alleges two counts against Old Dominion plan fiduciaries: one for breach of fiduciary prudence to participants for selecting and retaining share classes and investments that both charged higher fees and one for failing to adequately monitor other plan fiduciaries.

“Defendant’s imprudence caused the plan and its participants to wrongfully lose roughly $3 million in retirement savings over the course of the relevant time period,” the complaint states. “[The plan] remains exposed to harm and continued losses, and those injuries may be redressed by a judgment of this Court in favor of plaintiff.”

Three of the four law firms listed on the complaint—McKay Law of Scottsdale, Arizona (the Knight-Swift complaint was filed in the U.S. District Court for the District of Arizona) and Morgan & Morgan and Wenzel Fenton Cabassa, both of Tampa, Florida—filed the earlier ERISA suit. “The lawsuits have substantial similarities,” explained Andrew Oringer, partner and co-chair of the ERISA and executive compensation group at Dechert LLP, which is involved in neither of the recent cases.

“Some firms may develop expertise or connections within specific industries, even where like compliance issues are not necessarily manifest across companies within that industry,” Oringer said. “In that case, a firm or firms might target companies within the same industry.”

Norris Law, of Wake Forest N.C., was not involved in the earlier lawsuit.  

The ‘Old’ Complaint

Attorneys for the plaintiffs claim Old Dominion plan fiduciaries failed to prudently monitor and select the proper share classes of 11 investments offered in the plan, according to the complaint. Plaintiffs’ attorneys contend that high-fee retail share classes were included in the plan when cheaper share classes meant specially for retirement plans were available.

“Investment companies recognize that trillions of dollars are invested through retirement plans, and they want their investments to be offered by retirement plans, so they offer pricing discounts to retirement plans,” stated the complaint. “The discounts offered by investment companies are often referenced by the corresponding share class label, with specific funds meant for retail or retirement plan investors.”

The complaint added that “the ‘retail’ share class of an investment charges a higher price than a ‘retirement plan’ share class. But in all other material aspects, the underlying investment is the same.”

The plaintiffs allege Old Dominion plan fiduciaries failed to select and retain—although widely available as an option for the plan—the R6 retirement share class of the JP Morgan Smart Retirement-2020 Fund target-date series, but instead included an R5 share class.

The R6 share class costs 40 basis points, 10 bps less than the 2020 R5 fund, according to the complaint. Another fund in the Old Dominion plan, the Russell Investments US Small Cap Equity S share class carries a 96bps expense ratio, more than the 83bps ratio for the Russell US Small Cap Equity R6 share class.

“By causing plan participants to pay more for identical investments, [the] defendant failed in its statutory ERISA duty to prudently defray costs of the plan,” the complaint states.

Old Dominion retirement plan participants had nearly $500 million invested in the “identified imprudent share classes,” according to the complaint, as of December 31, 2021.

Old Dominion fiduciaries are also alleged to have failed to adequately monitor other plan fiduciaries, in violation of ERISA, according to the complaint.

“[The] plan sponsor, had a duty to monitor the [retirement] committee and ensure that the committee was adequately performing its fiduciary obligations, and to take prompt and effective action to protect the plan if the committee was not fulfilling those duties,” the complaint stated.

The Old Dominion plan had more than $2 billion in assets under management and 24,033 total participants with account balances, as of December 31, 2021, the court filing said.

Neither the plan sponsor nor plaintiffs’ attorneys responded to questions on the lawsuit. Attorneys for the plaintiffs brought the lawsuit against Old Dominion before the U.S. District Court for the Middle District of North Carolina.